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1998-0603_TAYLOR WOODROW HOMES CALIIFORNIA_Slope Displacement Warranty Agreement see A , ; 32400 PASEO ADELANTO MEMBERS COLLE ECITY CAMPBELL SAN JUAN CAPISTRANO,CA 92675 ILLS' LyJI JOHN INER LL JOHN GREINER (949)493-1171WYATT HART (949)493-1053 (FAX) GILJONES 1776 DAVID M.SWERDLIN • • CITY MANAGER GEORGE SCARBOROUGH July 15, 1998 Mr. Alfredo Ayuyao Taylor Woodrow Homes California Ltd 24461 Ridge Route Laguna Hills, California 92653-1686 Re: Slope Displacement Warranty Agreement - Tract 13866 and 13437 Dear Mr. Ayuyao: At their meeting of July 7, 1998, the City Council of the City of San Juan Capistrano approved the "Agreement Establishing Slope Displacement Warranty Program and Reservation of Easements" for Tract 13866 and 13437. A fully executed copy of the Agreement is enclosed for your files. A copy has been forwarded to the Orange County Recorder's Office for recordation. Please feel free to contact Sam Shoucair at 949-443-6355 if you have any questions. Verry truly yours, Cheryl Joh 9' City Clerk Enclosure cc: San Juan Hills Estates (with enclosure) Warmington Homes (with enclosure) Engineering and Building Director (with enclosure) Sam Shoucair (with enclosure) DRUG USE IS B San Juan Capistrano: Preserving the Past to Enhance the Future 8. OVAL OF LICENSE AGREEMENT FOR IMPROVEMENTS IN THE PUBLI T-OF-WAY RELATING TO ENTRY GATE ON MALASPINA ROAD TRACT ALASPINA HOMEOWNERS ASSOCIATION 600.30) As set forth in the Report dated July 7, from the Director of Engineering and Building, the Mayor and City Clerk were authorized to eTThe he License Agreement between the Malaspina Homeowners Association and the Cion of an entry gate and related facilities on the public portion of Malaspina Roaity=ler uthorized to forward the Agreement to the Orange County Recorder ordation. 9. APPROVAL OF AGREEMENT FOR SLOPE DISPLACEMENT WARRANTY PROGRAM-TRACTS 13866 AND 13437(TAYLOR WOODRO W HOMES AND WARMINGTON SAN JUAN HILLS. L.P.) (600.30) As set forth in the Report dated July 7, 1998 from the Director of Engineering and Building, the "Agreement Establishing Slope Displacement Warranty Program" for Tracts 13866 and 13437 was approved and the City Clerk was authorized to forward the Agreement to the Orange County Recorder for recordation. I AWARD OF DESIGN SERVICES CONTRACT, SAN JUAN CAPISTRANO FFIC MODEL AUSTIN-FOUST ASSOCIATES INC. CIP NO. 127 6( 00. As set forth in eport dated July 7, 1998 from the Director of Engineering and Building, the Agreement to de op the San Juan Capistrano Traffic Model was approved with Austin- Foust Associates, Inc. i e amount of$56,600. 11. APPROVALOFAMENDED AL MAP AND SUBDIVISION IMPROVEMENT AGREEMENT TRACT 1437 PEPPERWOOD ESTATES SAN JUAN ENCLAVE, LLC, (6Z 00.30) Asset forth in the Report dated July 7, 1998 m the Director of Engineering and Building, the Amended Final Map and Subdivision provement Agreement, Tract 14379, Pepperwood Estates was approved and the City En i eer and City Clerk were authorized to execute the Amended Final Map. The Mayor and Ci Jerk were authorized to execute the Amended Subdivision Improvement Agreement and ac t the corresponding securities. The City Clerk was directed to forward the Amended and Amended Subdivision Improvement Agreement to the County Recorder for recordati 12. ADOPTION OF RESOLUTION SETTING A DATE AND TIME R A PUBLIC HEARING REGARDING SALE OF A PORTION OF THE HELICO TER HILL PARK SITE (WITT) (670.70) As set forth in the Report dated July 7, 1998 from the Director of EngineerX g, the following Resolution setting a Public Hearing for August 4, 1998,regard City Council Minutes -5- 7/7/98 • AGENDA ITEM July 7, 1998 TO: George Scarborough, City Manager FROM: William M. Huber, Director of Engineering & Building SUBJECT: Consideration of Agreement for Slope Displacement Warranty Program - Tracts 13866& 13437, Taylor Woodrow Homes & Warmington San Juan Hills , L.P. RECOMMENDATION It is recommended that the City Council approve the"Agreement Establishing Slope Displacement Warranty Program" for Tracts 13866 &13437, Taylor Woodrow Homes & Warmington San Juan Hills , L.P. and authorize the City Clerk to forward the Agreement to the Orange County Recorder for recordation. SITUATION A. Summary and Recommendation Tracts 13866 &13437, are required to establish by agreement a Slope Displacement Warranty Program as provided by City Municipal Code Section 9-10.03.(b). The agreement provided in Attachment 1 provides the mechanism to establish the program. The agreement has been reviewed by the City Attorney and found to be consistent with the provisions of the Code. Staff is, therefore, recommending its approval. B. Background History The subject Agreement is by and among Taylor Woodrow Homes (TWH), Warmington, the San Juan Hills Estates HOA and the City. TWH/developer is in the process of developing Tracts 13866 and 13437 as a residential project including open space lots, in the Glenfed areas D-1 and D-2. Warmington is a merchant builder who has acquired lots from TWH within these two tracts for development of single family residences and related amenities. On September 15, 1987, the City Council adopted Ordinance No. 605, requiring that certain residential developments include a Slope Displacement Warranty Program. The subject development project is required to provide such warranty Program. FOR CITY COU: CIL ACG: a^ .. 1 AGENDA ITEM -2- July 7, 1998 The program covers surficial slope displacement. The Slope Displacement Warranty Program is directed at minor slope displacement defined by the Municipal Code as not exceeding three feet in depth and can be remedied at a relatively low cost. The program is targeted to benefit the new homeowners in the subdivision and covers only those slopes within the tract boundaries. The program provides for the developer to deposit an initial amount of funds based on the slope areas maintained by the HOA. As residents move into the development, a portion of their monthly fees would be put into this fund. Once the residents' deposits reached 75% or more of the developer's initial deposit, then that deposit would be released back to the developer. On June 6, 1989, the City Council adopted Resolution No. 89-6-6-4, approving vesting Tentative Tract Map No. 13436. On July 16, 1991, the City and developer's predecessor- in-interest, the Lusk Company, entered into an Agreement to establish the required "Slope Displacement Warranty Program" which spelled out the terms for the implementation by developer of such Program with respect to Tract Nos. 13436, 13437, 13865 and 13866. On April 18, 1995, the Council adopted a motion amending this Agreement to, among other things, delete Tract No. 13 865 from the Slope Displacement Warranty Program. TWH may annex tract 13436, (Area C-2)into the subject development and its HOA and therefore desires to amend and replace the original Agreement as it relates to the Slope Displacement Warranty Program only to further clarify the rights and obligations of all responsible parties with respect to such Program. By executing this Agreement, TWH satisfies in full all conditions of approval relating to the Slope Displacement Warranty Program of subject development in accordance with City Ordinance No. 605 and all City requirements relating to any soils subsidence remediation programs at any time implemented by the City. Agreement The Agreement(Attachment 1) has been drafted and reviewed by staff and found to be consistent with the Municipal Code requirements. Important elements provided in the agreement include: AGENDA ITEM -3- July 7, 1998 1) Developer's liability for any slope failure within the first three-year period. 2) Developer's warranty period of ten-years to pay the balance of any insufficient HOA Assessment Fund to cover the cost of slope repairs. 3) Return of developer's funds consistent with the requirements of the San Juan Municipal Code. 4) Homeowner assessments to special fund. The City Attorney has provided a detailed review of this Agreement and found it to be consistent with the City's Municipal Code requirements and other applicable provisions of law. Staff believes the Agreement is, therefore, recommendable for acceptance and approval by the City Council. FINANCIAL CONSIDERATIONS There is no cost impact to the City's General Fund. PUBLIC NOTIFICATION Taylor Woodrow Homes, Attention: Alfredo Ayuyao Warmington San Juan Hills Associates, L.P., Attention: Brian Sinderhoff San Juan Hills Estates Homeowners Association, Attention: R. Liewer ALTERNATE ACTIONS 1. Approve the"Agreement Establishing Slope Displacement Warranty Program" for Tracts 13866 & 13437, Taylor Woodrow Homes & Warmington San Juan Hills , L.P. 2. Do not approve Agreement. 3. Return to staff for additional information. - � s AGENDA ITEM -4- July 7, 1995 RECOMMENDATION It is recommended that the City Council approve the "Agreement Establishing Slope Displacement Warranty Program" for Tracts 13866 &13437, Taylor Woodrow Homes & Warmington San Juan Hills, L.P. and authorize the City Clerk to forward the Agreement to the Orange County Recorder for recordation. Respectfully submitted, Prepared by: G��1112 William M. Huber cair Director of Engineering& Building Senior Engineer WMH/SS:ch Attachment: Agreement Establishing Slope Displacement Warranty Program c 9AgendaAslopetay.lor RECORDING REQUESTED BY: City of San Juan Capistrano Recorded in the County of Orange, California WHEN RECORDED MAIL TO: Gary L. Granville, Clerk/Recorder City of San Juan Capistrano IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII 69,00 Attn City Clerk 19980478859 3:21pm 07/24/98 32400 Paseo Adelanto 005 29006675 29 57 San Juan Capistrano, CA 92675 Al2 22 6.00 63.00 0.00 0.00 0.00 0.00 Space above this line for Recorder's use only AGREEMENT ESTABLISHING SLOPE DISPLACEMENT WARRANTY PROGRAM 1 AND RESERVATION OF EASEMENTS This Agreement Establishing Slope Displacement Warranty Program and �tJ Reservation of Easements ("Agreement") is entered into as of June 3, 1998, )OOM by and among TAYLOR WOODROW HOMES, INC., a California corporation ("Developer"), WARMINGTON SAN JUAN HILLS ASSOCIATES, L.P., a California limited partnership ("Warmington"), SAN JUAN HILLS ESTATES HOMEOWNERS ASSOCIATION ("Association") and the CITY OF SAN JUAN CAPISTRANO ("City"), and pertains to that certain real property more particularly described on Exhibit "A" attached hereto and incorporated herein by this reference ("Property"). RECITALS This Agreement is made with reference to the following facts: A. Developer is in the process of developing Tracts 13866 and 13437 as a residential project including open space lots ("Projeci"), in the City of San Juan Capistrano. B. Warmington is a merchant builder who has acquired lots from Developer, and may acquire additional lots from Developer, within the Project for development with single family residences and related amenities. C. On September 15, 1987, the City Council ("Council") of the City passed, approved and adopted Ordinance No. 605 ("Basic Ordinance"), requiring that certain residential developments in the City include a slope displacement warranty program. D. On June 6, 1989, the Council passed, approved and adopted Resolution No. 89-6-6-4 ("Original Resolution"), approving vesting Tentative Tract Map No. 13436 and certain other matters. On July 16, 1991, the City and Developer's predecessor-in-interest, The Lusk Company, a California corporation, entered into that certain Agreement Establishing Slope Displacement Warranty Program as recorded on September 12, 1991 as Instrument No, 91-496385, Official Records of Orange County, California (the "Original Agreement"). The Original Agreement set forth the terms for the implementation by Developer of a Soils Warranty Program ("Slope Displacement 1 agmt re slope displacentent4.cln 06/01/98 Warranty Program") with respect to Tract Nos. 13436, 13437, 13865 and 13866. On April 18, 1995, the Council passed, approved and adopted a motion amending the Original Agreement to, among other things, delete Tract No. 13865 from the Slope Displacement Warranty Program. The Original Agreement as subsequently modified by the action of the Council shall hereafter collectively be referred to as the Original Agreement. E. The Association is a California non-profit mutual benefit corporation which will own the common area lots within the Project and will serve as the homeowners' association for the Project. F. In addition, Tract 13436 may, at TWH's election, be annexed into the Project and into the area which is subject to the jurisdiction of the Association pursuant to the terms of that certain Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for San Juan Hills Estates (the "Declaration"). G. The parties hereto desire to amend and replace the Original Agreement as it relates to the Slope Displacement Warranty Program only (and not with respect to the "City Home Warranty Program", as defined therein) and as it relates solely to the Project, to, among other things, more clearly set forth the rights and obligations of the parties with respect to the Slope Displacement Warranty Program. The parties further desire to provide for the possible future annexation of Tract 13436 into the Slope Displacement Warranty Program as established herein. H. By this Agreement, Developer satisfies in full with respect to the Project (i) all conditions of subdivision approval relating to the Slope Displacement Warranty Program, (ii) all requirements of the Basic Ordinance, and (iii) all conditions and requirements of the City in any way relating to any soils subsidence remediation programs at any time implemented by the City. AGREEMENT 1. Definitions. Defined terms whose initial letters are capitalized herein shall have the meanings given to such terms as set forth in this Agreement, including on Exhibit "B" attached hereto. 2. Slope Displacement Warranty Program. 2.1 Slope Displacement Warranty Program and Term. Developer's subdivision approvals for Vesting Tentative Tract 13436 require that Developer's Project include a "Slope Displacement Warranty Program". This Agreement sets forth the above-referenced Slope Displacement Warranty program as it relates to Final Tracts 13866 and 13437 and, upon its subsequent annexation pursuant to the terms of Section 8, below, Final Tract 13436. The term of the Slope Displacement Warranty program shall be for a period commencing as of October 17, 1996 and continuing until October 16, 2006 ("Slope Displacement Warranty Period"). 2.2 Developer Liability Period. During Developer's Liability Period for each Tract, Developer shall make or cause to be made, at Developer's sole expense, all Covered Repairs within the subject Tract necessitated by Slope Displacements. In the event Developer fails to perform as provided herein, the City 2 agmt re slope displacement tAn 06/01/98 shall have the right to draw upon Developer's security posted under the terms of Section 5.1, below, as provided in Section 5.3, below. 2.3 Developer Warranty Period. If a Slope Displacement occurs within a Tract during the portion of the Slope Displacement Warranty Period following expiration of the Developer's Liability Period for such Tract, the Association shall make or cause to be made the Covered Repairs necessitated by such Slope Displacement to the extent funds are available therefor out of the Association Assessment Fund. In the event funds available in the Association Assessment Fund is insufficient to cover the cost of all such Covered Repairs, Developer shall pay the balance of the cost of the Covered Repairs not covered by the Association Assessment Fund. In the event Developer fails to perform as provided herein, the City shall have the right to draw upon Developer's security posted under the terms of Section 5.2, below, as provided in Section 5.3, below. 2.4 Reserved Riehts. Developer and the Association reserve the right to assert claims against any person or entity responsible in whole or in part, by reason of negligence or willful misconduct of the person or entity against whom the claim is asserted, for displacement of soil on the slopes, whether covered by the Slope Displacement definition or not, including without limitation claims against one another. These reserved rights are subject to all applicable statues of limitation, including without limitation the ten (10) year limitations period provided by Section 337.15 of the California Code of Civil Procedure. 3. Claims Procedures and Adjustments. During the Developer's Liability Period for each Tract, the Slope Displacement Warranty Program shall be administered by the Developer. Thereafter, said program shall be administered by the Association. In the event any party receives notice of a claim that a Slope Displacement has occurred, such party shall give all other parties written notice of such claim setting forth the name and address of the claimant and the nature and extent of the claim to the extent such information is available. Within fifteen (15) days after receipt of any such notice, the person or entity then administering the Slope Displacement Warranty Program shall select an independent and reputable claims adjusting service, geologist and/or soils engineer (duly licensed to the extent required) with experience in handling soils and slope displacement matters (referred to herein as a "Claims Adjuster"). Any Claims Adjuster so selected shall be subject to approval by the other parties to this Agreement, which approval shall not be unreasonably withheld, delayed or conditioned. Any disapproval of the selected Claims Adjuster shall be given in writing to the then administrator of the Slope Displacement Warranty Program and to the other parties to this Agreement within ten (10) days following receipt by the disapproving party of written notice of the selection of the proposed Claims Adjuster. If such written disapproval or a written approval are not given within said ten (10) day period, then approval of the proposed Claims Adjuster shall be deemed to have been timely and properly given. If the proposed Claims Adjuster is properly and timely disapproved as contemplated above, then the selection of the Claims Adjuster shall be made by an arbitrator in connection with an arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association as then in effect. Any such arbitration shall be held and conducted in Orange County, California before one arbitrator who shall be selected by mutual agreement of the parties to this Agreement within fifteen (15) days after any party to this Agreement has notified the other parties that it has commenced or desires to commence an arbitration proceeding for the purpose of selecting a Claims Adjuster. If the parties to the Agreement cannot or do not mutually agree upon an arbitrator 3 agmt re slope displacemenWcln 06/01/98 within the said fifteen (15) day period, then any party to this Agreement may thereafter request in writing that the presiding Judge of the Superior Court of Orange County, California select and appoint the arbitrator, and any person so selected and appointed by such Judge shall serve as the arbitrator hereunder upon his/her acceptance of such appointment. The arbitrator appointed must be independent and have experience in dealing with soils and slope displacement matters. Final decision by the arbitrator must be made within ninety (90) days from the date the arbitrator is appointed. The parties to this Agreement may submit the names and resumes of proposed Claims Adjusters to the arbitrator, but the arbitrator shall be free to select any Claims Adjuster he or she wishes to select so long as the Claims Adjuster is independent, duly licensed to the extent required, and has experience in handling soils and slope displacement matters. Each party to this Agreement shall bear its own attorneys' fees, costs and expenses incurred in connection with the arbitration. The costs and fees of the arbitrator shall be borne equally by the parties to this Agreement. The decision of the arbitrator in selecting a Claims Adjuster shall be final and judgment may be entered on it in accordance with applicable law in any court having jurisdiction over the matter. The Claims Adjuster selected by the arbitrator as aforesaid shall be deemed the "approved" Claims Adjuster. The approved Claims Adjuster shall be promptly engaged by the party then administering the Soils Displacement Warranty program, and the Claims Adjuster so engaged shall be responsible for promptly investigating, allocating responsibility for and adjusting all claims which allege that a Slope Displacement has occurred that is within the coverage of the Slope Displacement Warranty Program. After reasonably appropriate investigation and analysis, the approved Claims Adjuster shall determine, among other things: (a) whether the claim is covered by the Slope Displacement Warranty Program and if so then the scope and estimated cost of the Covered Repairs, (b) who has responsibility under this Agreement for actually performing the Covered Repairs or causing them to be performed, and (c) who has under this Agreement the financial responsibility for the requisite Covered Repairs. The person or entity having the ultimate financial responsibility for the Covered Repairs under this Agreement shall also bear the cost of the Claims Adjuster and all investigation costs reasonably incurred by the Claims Adjuster. The Claims Adjuster shall complete his/its analysis as soon as reasonably possible and shall thereupon issue a written report to all of the parties to this Agreement, which written report shall set forth its findings on the issues referred to above and such other matters as the Claims Adjuster deems appropriate. The parties agree that they shall promptly comply with the decisions and findings of the Claims Adjuster as set forth in such report. The parties intend that the decisions and findings of the Claims Adjuster shall be deemed binding upon them and shall be enforceable against them by a court of competent jurisdiction and any party failing to comply with such decisions and findings of the Claims Adjuster as they affect such party shall be liable for damages and all other relief as may be determined appropriate by a court of competent jurisdiction. 4. Grace Period. A party shall only be deemed in default under this Agreement if such party fails to perform any of its duties or obligations under this Agreement and such failure is not cured within thirty (30) days after written notice of such failure has been given to such party. If such failure cannot reasonably be cured within thirty (30) days after the giving of such notice, then said party shall not be deemed in default under this Agreement if such party commences to cure the failure within said thirty (30) day period and thereafter diligently and in good faith continues to prosecute such curative 4 agmt re slope displacement4.cln 06/01/98 action to completion. The notice of failure referred to in this Section 4 above shall specify the alleged failure in detail. 5. Security for Developer's Obligations. 5.1 Security for Developer's Obligations During Developer Liability Period. Within fifteen (15) days from the date hereof, Developer shall provide a surety bond or labor and material bond to secure Developer's performance of its obligations under Section 2.2, above. Such security shall be in an amount equal to the sum of Four Hundred Sixty Thousand Dollars ($460,000) times a ratio, the numerator of which is the square footage of manufactured slope within the Project and the denominator of which is the total square footage of all manufactured slope included within the Property, all as shown on Exhibit "C". The surety and the form of any bond posted pursuant to this Section shall be subject to the approval of the City, which approval shall not unreasonably be withheld. The security posted pursuant to this Section for each Tract shall be released immediately upon the expiration of the Developer Liability Period for such Tract. 5.2 Security for Developer Warranty Period. 5.2.1 Deposit of Funds. Within fifteen (15) days from the date hereof, Developer shall deposit into the Association Assessment Fund cash in an amount equal to Four Hundred Sixty-Four Thousand Dollars ($464,000) times a ratio, the numerator of which is the total square footage of the manufactured slopes within the Project and the denominator of which is the total square footage of manufactured slope within the Property, all as shown on Exhibit "C" attached hereto. 5.2.2 Security in Lieu of Cash Deposit(s). In lieu of the cash deposit(s) by Developer into the Association Assessment Fund as provided above, Developer shall have the option to guaranty and secure performance of its obligations under Section 2.3, above, by one of the following alternatives, at the option of Developer with the approval of the City Council: (a) Corporate securities approved by the City Attorney; (b) A deposit, either with a responsible escrow agent or trust company, of money or negotiable bonds of the kind approved for securing deposits of public monies; or (c) An instrument of credit from one or more financial institutions subject to regulation by the state or federal government pledging that the funds necessary to secure Developer's obligations under Section 2.2 are on deposit and guarantied for payment. 5.2.3 Release of Security. The security posted pursuant to this Section 5.2 shall be immediately released by the Association and/or the City, as the case may be, upon the expiration of the Slope Displacement Warranty Period. In addition to the foregoing, subject to the terms of Section 5.6, below, at such time as the balance of the Association's Assessment Fund is equal to or greater than the sum of Five Hundred Thousand Dollars ($500,000) times a ratio, the numerator of which is the square footage of manufactured slope within the Project and the denominator of which is the total square footage of all manufactured slope within the Property (a) all 5 agmt re slope displacement4xln 06/01/98 additional funds collected through assessments pursuant to the terms of Section 6.1, below, shall be released to Developer, to the extent Developer has deposited cash in the Association's Assessment Account pursuant to the terms of Section 5.2.1, above, or (b) in the event Developer has posted security in lieu of cash deposits pursuant to the terms of Section 5.2.2, above, the amount of such security required to be maintained by Developer shall be reduced on a dollar per dollar basis, until Developer has reimbursed all of Developer's cash and/or Developer's security has been reduced to zero. 5.3 Rights of City Upon Developer's Default. If during the Developer Liability Period, in accordance with Section 2.2., above, or the period subsequent to the Developer Liability Period pursuant to the terms of Section 2.3, above, Developer (or its successor) fails to perform its obligations as required under those Sections, the City Attorney shall provide written notice to Developer of such failure and provide Developer with an opportunity to cure in accordance with Section 4, above. In the event Developer fails to cure its failure of performance within the cure period, then the City Council may, by resolution or other official Council action, after a noticed public hearing, authorize the Director of Engineering and Building ("Director") to draw upon the security posted by Developer pursuant to this Section 5 to perform such work or otherwise cure Developer's default hereunder (the "Authorized Monies"). The Association Assessment Fund and any security provided by Developer pursuant to this Section 5 shall be vested such that the Director can access such funds or security after such Council action and any judicial reference regarding such action pursuant to Section 5.5, below. 5.4 Public Hearing. Developer (or its successor) will be entitled to reasonable notice of such public hearing, will have the right to appear at the hearing where the Council action is considered, and will be entitled to assert any and all defenses which Developer (or its successor) may possess as to such Council action including, without limitation, a claim that the work proposed to be performed is not within the scope Developer's obligation under this Agreement or is not reasonably necessary. 5.5 Dispute Resolution. In the event of a dispute between the City and Developer (or its successor) involving any aspect of the penalty provided for herein including, without limitation, the propriety of the Council action provided for herein, such dispute shall be resolved by a judicial reference pursuant to Section 7, below. 5.6 Deemed Reduction in Developer's Contribution. Developer agrees and acknowledges that if such Council action is taken properly pursuant to this Agreement and under the laws of the State of California, then as a penalty for non- performance by Developer (or its successor) under the terms of Section 2.3, above, the security posted by Developer pursuant to Section 5.2 shall be deemed (for purposes of timing of recovery of Developer's security only) to have been reduced by an amount equal to the amount of the Authorized Monies. Under those circumstances, Developer's recovery of its funding or posting of security pursuant to Section 5.2 will be delayed until deposits by the Association into the Association Assessment Fund pursuant to Section 6.1, below, build sufficiently to offset the deemed reduction in Developer's deposits or security. 6. Homeowner Association Assessments to Fund the Association's Assessment Fund. 6.1 Association to Levy and Collect Monthly Assessments. Each month, commencing as hereinafter provided, the Association shall levy and collect 6 agmt re slope displacemenWeIn 06/01/98 homeowner assessments (the "Common Assessment") with respect to each residential lot in the Project then subject to assessment in an amount as provided in the Association's annual budget as approved by the DRE for the Project (the "Budget"), commencing upon the close of escrow and conveyance of the first residential lot within the Project to be sold and conveyed to a member of the public under the auspices of a final subdivision public report issued by the DRE for any portion of the Project. Of the Common Assessment, a portion shall be designated to fund the Association's obligations under Section 2.3 as provided in the Budget (the "Association's Assessment Fund"). In no event shall the Association's Budget and the resulting Common Assessment be changed to provide for the funding of less than Eighteen Dollars per month per residential lot then subject to assessment into the Association's Assessment Fund without the prior approval of the City and the Developer, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, the Association shall have the right to change the Budget and/or the Common Assessment pursuant to the terms of the Declaration without the consent of the City or the Developer (except as otherwise required under the terms of the Declaration) provided any such change does not result in the funding of less than Eighteen Dollars ($18.00) per month per residential lot then subject to assessment into the Association's Assessment Fund. The Association's Assessment Fund, consisting of assessment payments and interest thereon, is intended to grow to a total of an amount (the "Project Fund Amount") equal to the sum of Five Hundred Thousand Dollars ($500,000) times a ratio, the numerator of which is the square footage of manufactured slope within the Project and the denominator of which is the total square footage of all manufactured slope within the Property, by the end of the Slope Displacement Warranty Period or earlier. The Association's Assessment Fund shall be established and maintained by the Association as a restricted reserve fund so that the funds therein shall be available to the Developer, the Association or the City for payment or reimbursement of costs for Covered Repairs implemented or to be implemented by the Developer and/or the Association as the party responsible therefor in accordance with the provisions of this Agreement. Monies constituting the Association's Assessment Fund and interest thereon shall be deposited and retained in a restricted reserve account ("Association's Assessment Account") to be established by the Association in its name as soon as practicably possible following the later of full execution and delivery of this Agreement or the issuance by the DRE of the initial final subdivision public report covering any residential lots within the Project. Monies in the Association's Assessment Account shall only be withdrawn and used for the purposes contemplated in this Agreement. 6.2 Cessation of Assessments Under Certain Circumstances. Except as otherwise provided in this Agreement, the Association may cease levying and collecting assessments as contemplated in Section 6.1 upon the last to occur of(a) when Developer has been fully reimbursed pursuant to Section 5, or (b) when the total balance of the Association's Assessment Account reaches the Project Fund Amount. 6.3 Replenishment of the Association's Assessment Account. In the event the Association's Assessment Account is depleted by the cost of making Covered Repairs, as contemplated by this Agreement, the Association will, by regular or special assessments, restore the total amount in the Association's Assessment Account to the lesser of (a) the balance of such fund immediately prior to such depletion or (b) the Project Fund Amount, within a reasonable period of time. 6.4 Responsibility of the Association and its Board of Directors. The Association and its Board of Directors shall be responsible for establishing and maintaining the Association's Assessment Fund and the Association's Assessment 7 agmt re slope displacemenOxIn 06/01/98 Account as herein provided, and for levying and using best efforts to collect assessments to fund the Association's Assessment Fund as herein provided. 7. Dispute Resolution. Any dispute arising out of this Agreement shall be heard by a reference pursuant to the provisions of California Code of Civil Procedure Section 638 et sec ., for a determination to be made which shall be binding upon the parties as if tried before a court or jury. 7.1 Within five (5) business days after service of a demand by a party hereto, the parties shall agree upon a single referee who shall then try all issues, whether of fact or law, then report a finding and judgment thereon. If the parties are unable to agree upon a referee, either party may seek to have one appointed, pursuant to California Code of Civil Procedure Section 640, by the presiding judge of the Orange County Superior Court. 7.2 The compensation of the referee shall be such charge as is customarily charged by the referee for like services. The cost of such proceedings shall initially be borne equally by the parties. However, the prevailing party in such proceedings shall be entitled, in addition to all other attorneys' fees and costs, to recover its contribution for the cost of the reference as an item of recoverable costs. 7.3 The referee shall apply all California rules of procedure and evidence and shall apply the substantive law of the State of California in deciding the issues to be heard. 8. Tract 13436. The parties hereby acknowledge that it has not yet been determined whether TWH or some third party will ultimately develop Tract 13436 as a residential housing project. In the event TWH ultimately develops Tract 13436 with residential dwelling units, it is TWH's intent and desire to annex Tract 13436 into the Project and into the Slope Warranty Program as established pursuant to the terms of this Agreement. Therefore, at such time as it is determined that TWH or its successor- in-interest intends to develop Tract 13436 as part of the Project and annex Tract 13436 into the area which is subject to the jurisdiction of the Association pursuant to the terms of the Declaration, TWH shall have the right to annex Tract 13436 into the Slope Displacement Warranty Program as established pursuant to this Agreement in accordance with a Notice of Annexation executed by TWH and the Director and recorded in the Official Records of Orange County, California. Unless and until the recordation of such Notice of Annexation, Tract 13436 shall continue to be governed by the terms of the Original Agreement. 9. Miscellaneous. 9.1 Additional Limitations on Slope Displacement Warranty Program. Nothing to the contrary in this Agreement withstanding, it is agreed that: 9.1.1 The Slope Displacement Warranty Program provided herein expressly excludes slope displacement or any other soils or earth movement or failure of slopes, regardless of cause, not expressly referred to herein, and any and all resulting damage, whether arising out of covered Slope Displacement or not. 9.1.2 In no event will performance of repair work by any person or entity or any other circumstances extend the Slope Warranty Period provided herein. 8 agmt re slope displacement4xln 06/01/98 i • 9.2 Reservation of License and Right to Enter. 9.2.1 There is hereby reserved for the benefit of Developer and its successors and the Association, a license and right to enter onto the common areas and individually-owned lots within the Project so that Developer or its successors and the Association and their agents may (a) inspect all landscaping, irrigation and drainage devices, and all other natural and artificial conditions which affect or might affect the integrity of the slopes which are the subject of the Slope Warranty, and (b) perform the duties of Developer to the full extent provided for herein. 9.2.2 Appropriate provisions in the grant deeds will grant the Association a license and right to enter onto the common areas and individually-owned lots of the Project so that the Association or its agents may inspect, maintain and repair the slopes within the Project to the full extent provided for herein. 9.3 Review and Approval by Association. Any proposed alterations by homeowners or any other person or entity to the landscaping, grading, irrigation or drainage on the individually-owned property or common areas will be subject to review and approval by the Board of the Association and/or by its Architectural Committee. 9.4 Reference in Deeds. The grant deeds will reference this Agreement and the Slope Displacement Warranty program provided herein. The provisions of this Agreement constitute covenants running with the land and an equitable servitude as to the real property referenced herein. 9.5 Collection and Reporting. The Board of the Association will be responsible for the collection of homeowner assessments for the Association's Restricted Assessment Fund and accounting for such assessments and interest thereon. The Board of the Association will report to Developer and to the City the incidence of covered and non-covered claims, as well as the balance in the Association's Restricted Assessment Fund as of the date of the report. Such reports will be made on or before January 31 and July 31 of each year. The Board will also provide to Developer at its request, and to the City at the City's request, any further information, documentation and/or cooperation as is reasonably necessary to effectuate the purposes of this Agreement. 9.6 Further Acts. The parties to this Agreement agree to perform such other and further acts and execute such other and further documents as are necessary to effectuate the intent of this Agreement. 9.7 Headings. The headings in this Agreement are inserted for convenience and identification only and are in no way intended to describe, define or limit the scope, intent or interpretation of this Agreement or any provisions hereof. 9.8 No Representations. No party or any agent, employee, representative, or attorney of or for any party has made any statement or representation to any other party regarding any fact relied upon in entering into this Agreement, and no party relies upon any statement, representation or promise of any other party or of any agent, employee, representative or attorney of any other party, in executing this Agreement, or making this settlement provided for herein, except as expressly stated in this Agreement. 9.9 Entire Agreement. This Agreement is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior 9 agmt re slope displacement4.cln 06/01/98 and contemporaneous oral and written agreements and discussions. This Agreement may be amended only by an agreement in writing among Developer (or its successors in interest or assignees), the City, and the Association. 9.10 Binding Upon Successors. This Agreement is binding upon and shall inure to the benefit of the parties hereto, their respective successors and assigns. 9.10.1 The Original Resolution as amended by the Amending Resolution and as embodied in this Agreement is binding upon Developer's successors in interest or assignees as to the Project, and any or all of them. 9.10.2 Effective upon the sale or other conveyance of Tract 14398 or any portion thereof in bulk, Developer will be relieved of its obligations under this Agreement as to the real property so sold or conveyed, to the extent that such obligations are assumed in writing by Developer's successors in interest or assignees, including without limitation the obligation to provide security for the Slope Warranty herein. Upon the City's receipt of reasonably adequate substitute security from any assuming party, the Developer's Security or the appropriate prorata portion thereof shall be appropriately released, exonerated and/or released to Developer by the City. 9.11 Construction of Agreement. Each party has cooperated in the drafting and the preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party. This Agreement shall be construed under California law. 9.12 Counterparts. This Agreement may be executed in counterparts, and when each party has signed and delivered to the other at least one such counterpart, each counterpart shall be deemed an original, and when taken together with the other signed counterparts, shall constitute one agreement, which shall be binding upon and effective as to all parties. 9.13 Severability and No Waiver. The invalidity or unenforceability of any provision of this Agreement shall not invalidate or render unenforceable any of the other provisions of this Agreement. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any such waiver constitute a continuing waiver unless otherwise agreed in writing. 9.14 Termination. Unless otherwise agreed among the parties, this Agreement shall automatically terminate upon expiration of the Slope Displacement Warranty Period at which time the obligations on the part of Developer (or its successors in interest or assignees) will automatically terminate and the unused cash, bonds or other security provided by Developer (or its successors in interest or assignees) which is still held by the City and/or by the Association, if any, shall be promptly and appropriately returned to Developer, exonerated and/or released from any further obligation, and upon such termination, the requirement that the Association maintain reserves in the Association's Assessment Fund shall be deemed likewise terminated. Nothing to the contrary herein withstanding, this Agreement shall not be deemed terminated as provided in this Section 9.14 above as to obligations and liabilities arising because of Slope Displacements occurring prior to the expiration of the Slope Displacement Warranty Period so long as a good faith written claim with respect to such Slope Displacement has been received by the parties prior to expiration of the Slope Displacement Warranty Period. 10 agmt re slope displacement4xin 06/01/98 9.15 Attorneys' Fees. In the event of any dispute between the parties to this Agreement or any action or proceeding to enforce any provision of this Agreement or to seek a declaration of rights under this Agreement, the prevailing party or parties shall be entitled to recover from the other party or parties all expenses, fees and costs of such matter, including without limitation reasonable attorneys' fees and any costs of appeal, investigation, preparation and professional or expert consultation or testimony incurred in connection with the matter. Moreover, if any party hereto without fault is made a party to any litigation instituted by or against any other party hereto, such other party shall indemnify such innocent party against and save him harmless from all costs and expenses, including reasonable attorneys' and experts' fees and costs incurred by him in connection therewith. 9.16 Notices. Any notice which either party may desire to give to the other party must be in writing and may be given by personal delivery, by mailing the same by registered or certified mail, return receipt requested, postage prepaid, or by Federal Express or other reputable overnight delivery service, or by telecopier or other reliable electronic type mail system to the party to whom the notice is directed at the address of such party hereinafter set forth, or such other address and to such other persons as the parties may hereafter designate. Any such notice shall be deemed given upon receipt if by personal delivery, forty-eight (48) hours after deposit in the United States mail, if sent by mail pursuant to the foregoing, or twenty-four (24) hours after deposit with Federal Express or other reputable overnight delivery service, or twenty- four (24) hours after transmission by telecopier or other reliable electronic type mail System. To Developer: Taylor Woodrow Homes, Inc. 24461 Ridge Route Drive Laguna Hills, California 92653 Attention: Thomas O. Redwitz Copy To: Timothy L. Randall, Esq. Songstad, Randall & Ulich 2201 Dupont Drive, Suite 420 Irvine, California 92612 To Association: San Juan Hills Estates Homeowners Association To the City: The City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: Director of Engineering and Building Telecopier: (714) 493-1171 The City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: City Attorney Telecopier: (714) 493-1171 11 agmt re slope displacement4.cln 06/01/98 written.IN WITNESS WHEREOF, this Agreement was executed on the date first above CITY: THE CITY OF SAN JUAN CA STRANO By: �<d / 7/7/98 Its:_qes, Mayor A est: DEVELOPER: TAYLOR WOOD W HOMES, INC., a California c tion By: Its: 12 agmt re slope displacement4xln 06/01/98 WARMINGTON: WARMINGTON SAN JUAN HILLS ASSOCIATES, L.P., a California limited partnership By: WARMINGTON HOMES, a California corporation, General Partner By:� Its: ',dx&�- ASSOCIATION: SAN JUAN HILLS ESTATES HOMEOWNERS' ASSOCIATION, a California non-profit mutual benefit corporation By: ts: Approved as and content this AK of 1997 City A4trney City o an Juan Capistrano 13 agmt re slope displacement4.cln 06/01/98 • STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On 1998, before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for Said County and State STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On June 10. 1998, before me, Michele R. Leondis, personally appeared R. Liewer , personally known to me (c- proved to ,-:, an the basis of sati.,F eter , e viaenee) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/ske4hey executed the same in his/her4heiauthorized capacity(ies) and that by his/her4heisignature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. MCNEIE R 11:C1� _ cow.�toea�t Notes aeik-caremw 4Notary ubli in fo Said ountyd State i CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of Cv'o-v\ge- On \9 3 before me, k_.,- �lG Rw Date Name and Title of Of tt o (e.g.,"Jane ,Notary Public") personally appeared 2�. :ave L . S. o_y\row , Name(s)of Signer(s) [?Fpersonally known to me s>rideraee LSA M.LARSON to be the person(kj whose named* is/a)* Corm 5s'cn 4 115OD45 subscribed to the within instrument and _ ;-d ' 3 NOTC y Puolic-California = acknowledged to me that he/sF�/tt1JNy executed ocngeCouny the same in his/her/thVr authorized My Comm.Expires Aug 4,2001 capacity(9,$), and that by his/r*r/tt*r signatureW on the instrument the person00, or the entity upon behalf of which the personal acted, executed the instrument. 1WITNESS my hand and official seal. ?-dS�J —fin OcN� Place Notary Seal Above V- Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document:fkrzr�4. Es\ch\:sti.�S \� icrrsx�� `.^ay.,Lnb..,Frcv cer% w 6Z Document Date: 3 . \ _Number of Pages:-\'b - Signer(s) Other Than Named Above:C'&�) cs, STC t T a scr�17 S5 \\5 n Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual Top of thumb here C Corporate Officer—Title(s): ❑ Partner—❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee G Guardian or Conservator Other: Signerls Representing: 0199]National Notary Association•9350 De Soto Ave.,P.O.Box 2402•Chatsworth,CA 91313-2402 Prod.No.5907 Reorder,Call Tolll-Free 1-800-876-6827 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On June 10. 1998, before me, Michele R. Leondis, personally appeared R. Liewer , personally known to me ,,.ea to i ts f e (z' Y: ==o s== the basis �r sanite;y e„.defteo) to be the person(s) whose name(s) is/afe subscribed to the within instrument and acknowledged to me that he/sheAhey executed the same in his/heF4heif authorized capacity(ies) and that by his/her#heisignature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. HELE PUVM Naw wcwe—caa"M � � ,� �NGECOUNW My Comm.UpWw JUN 4.MV i q ' %) Notary Public i and for Said Co y and State EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY That certain real property located in the City of San Juan Capistrano, County of Orange, State of California, described as follows: Lots 1 through 145, inclusive, and Lettered Lots A through L, inclusive, of Tract No. 13866 as shown on Amended Map No. 1 of Tract 13866 filed in Book 737, Pages 32 through 44, inclusive, of Miscellaneous Maps in the Office of the County Recorder of said County. Lots 1 through 112, inclusive, and Lettered Lots A through N, inclusive, of Tract No. 13437 as shown on Amended Map No. 1 of Tract 13437 filed in Book 743, Pages 8 through 12, inclusive, of Miscellaneous Maps in the Office of the County Recorder of said County. Lots 1 through 6, inclusive, and Lettered Lot A of Tract No. 13436 as shown on a map filed in Book 680, Pages 1 through 8, inclusive, of Miscellaneous Maps in the Office of the County Recorder of said County. agmt re slope displacement PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 118 1) On July 7, 1998 , before me, Cheryl Johnson City Clerk,personally appeared - - - Gil Jones - - - personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. (SEAL) WITNESS my hand and official seal. City Clerk OPTIONAL Capacity Claimed by Signer Description of Attached Document Municipal Corporate Officer Slope Displacement Warranty Program Agreement Taylor Woodrow/Warmin tg on& San Juan Hills Estates HOA Mayor Title or Type of Document Title Twenty-one Signer is Representing Number of Pages City of San Juan Capistrano June 3, 1998 Date of Document Taylor Woodrow/Warmineton/San JuanHills Estates HOA Signer(s)Other Than Named Above EXHIBIT "B" DEFINITIONS The defined terms set forth below shall have the definitions given to them herein: "Amending Resolution" shall have the definition given to such term in Paragraph C of the Recitals to the Agreement. "Association" shall mean San Juan Hills Estates Homeowners' Association, a California non-profit mutual benefit corporation. "Association's Assessment Fund" shall have the meaning given to it in Section 6.1 of the Agreement. "Association's Assessment Account" shall have the meaning given to it in Section 6.1 of the Agreement. "Authorized Monies " shall have the meaning given to it in Section 5.3 of the Agreement. "Basic Ordinance" shall have the meaning given to such term in Paragraph B of the Recital to the Agreement. "Board" shall mean the Board of Directors of the Association. "City" means the City of San Juan Capistrano, California. "Claims Adjuster" shall have the meaning given to such term in Section 3 of the Agreement. "Common Assessment" shall have the meaning given to it in Section 6.1 of the Agreement. "Council" shall have the meaning given to it in Paragraph "B" of Recitals of the Agreement. "Covered Repairs" shall mean all repairs to correct any damage to individual lots and structures or common/public improvements located within the Covered Slopes of the Project and arising due to a specified type of Slope Displacement occurrence, but specifically excluding the Excluded Coverage Items. "Covered Slopes" means the slopes within the Property as shown on Exhibit "C" attached hereto: "Declaration" shall have the meaning given to it in Paragraph "E" of Recitals of the Agreement. "Developer" means Taylor Woodrow Homes, Inc., a California corporation and Warmington San Juan Hills Associates, L.P., a California limited partnership. "Developer Liability Period" shall mean for each Tract within the Project the period commencing with completion and certification by the City of rough grading for agmt re slope displacement the Tract ("Certification Date") and expiring on the last to occur of (a) the date three (3) years after the Certification Date, or (b) the close of escrow for the sale of the last unsold residential lot within the Tract. "Director" shall have the meaning given to it in Section 5.3 of the Agreement. "DRE" shall mean the California Department of Real Estate and any successor thereto. "Excluded Coverage Items" means (i) surface cracking and fissures, including without limitation desiccation cracks or erosion, defined as the wearing away of the surface of the slope, as opposed to movement of the slope, resulting from the force of water, wind, persons or vehicles moving over the surface, unless erosion ultimately results in a Slope Displacement, as defined herein, (ii) displacement of soil caused solely by earthquake or seismic activity of significant intensity. "Original Agreement" shall have the meaning given to it in Paragraph "C" of Recitals of the Agreement. "Original Resolution" shall have the meaning given to it in paragraph C of the Recitals to this Agreement. "Project" shall have the meaning given to it in Paragraph A of the Recitals to this Agreement. "Project Fund Amount" shall have the meaning given to it in Section 6.1 of the Agreement. "Property" means that certain real property more particularly described on Exhibit "A" attached hereto. "Slope Displacement" means (a) displacement of soil on a manufactured slope at a depth of two feet (2') or with vertical movement of one foot (1') or more, regardless of cause, and regardless of the square footage involved, or (b) displacement of soil on a manufactured slope of vertical movement of one foot (1') and involving an area of at least nine hundred (900) square feet, regardless of depth and regardless of cause, but excluding the Excluded Coverage Items and all other slope and soils displacement not specifically included within the definitions of slope displacement as provided herein. "Slope Displacement Warranty Period" has the meaning given to it in Section 2.1 of this Agreement. "Slope Displacement Warranty Program" shall have the meaning given to it in Paragraph C of the Recitals and in Paragraph 2.1 of this Agreement. "Tract" means each of Tract 13866, Tract 13436 and Tract 13437 as more particularly described on Exhibit "A" attached hereto. agmt re slope displacement 4 _ • V. b _ Exhibit C Tract 13436 Slope Warranty Exhibit Area C-2: 7.43 Acres IN 1� A 3.57 Acres B 0.36 Acres ` •. r._,_,_,.•.._.. C 3.50 Acres fk PREPAREO BY: ® HUNSAKER SE ASSOCIATES I R v I n E , I H C MAW . RK]lRItR1G • SI/EV1YlIG TM«IRd•�•,.M "MV.n,OM w»q.Ie PW,omA nNI ��� �\�` �,F��i����\JI�,I) • • • r • WWI NO Ah Lm ME I '9`� y � `Z���/r ♦•r� �y 1 f�� � �� ��o �� V i i�g�IIS�Z1/��� C R. , n '•Cxl. O pit �k �N � �;•,nom[ �. e Q t`►\•�. ��, . . �► ��